Bloomberg Atomize of day: Australia 04/24/2024

Welcome to DAYBREAK Australia.I'm Paul Allen in Sydney. We're counting down to Asia's majormarket opens. I'm out of old rulers in Hong Kong.And the top stories this hour. Asian stocks set for early gains aftertech heavyweights lift Wall Street with investors focused on earnings as a majortest of sentiment on equities. Tesla jumping in light trade with apromise to fast track cheaper models, taking the spotlight from some uglysales and profit numbers. Plus, Apple's China sales said to plunge19% last quarter, putting it third in a key market as local rival Huawei surges.All right, Let's take a look at how it's.

Shaping up for trades in the AsiaPacific. It looks like it's going to be prettymuch a risk on day. We did see gold prices ease a littlebit. So maybe some of the miners, maybe someof the Japan gold ETFs could suffer a little bit.But broadly speaking, it looks like we're setting up for a positive start.New Zealand already a few points in positive territory.Interesting down the data Dockers as well.We're going to get first quarter CPI numbers out of Australia.That's going to be a critical to the.

Future path of rates here.Those numbers are seen easing to three and a half percent, down from 4.1.It's a big improvement still outside the RBA's target band.However, we're also getting a Bank of Indonesia decision later today.The consensus there is for a hold. Nikkei futures also in positiveterritory by a fifth of 1%. We have heard that the Bank of Japan isgoing to focus on weakening the yen at its next meeting.Right now we've got the yen one 4477 and also today, bell.We're going to be keeping a close eye on those.A Tesla supplier's stock surging after.

Hours, especially following that analystcall. Yeah, that's right.It really is very much an earnings call perhaps.And instead of earnings that investors wanted to see for a company that hasjust slumped so much this year. But taking a look what we've got for usfutures that are just coming on line, again, you're looking towards somefurther gains when we trade for the Wednesday session.But as you said, that story very much focused on earnings.And Tesla, one of the key ones, we can get to the after hours move in just aminute.

But what else you were tracking todaywas just sort of the the the optimism that's coming back in and the bullishforecast as well that we're hearing if you change on some of those are comingthrough, for instance, from Goldman Sachs, this was a company that actuallyclosed at a record high, a first record high that we've seen since 2021.But first quarter earnings came through last week included, as we know, amassive profit beat in one. And analysts as well, calling that anear perfect print. Apple also actually managing to postsome gains, which was sort of surprising as well given what came through with theChina headline we just heard there.

But first quarter China iPhone salesdropping nearly 20%, that's according to some research.It is just a story of China really continuing to lose advantage in thatmarket after hours of course that big focus.So it Texas Instruments, another one that was very optimistic in its earningsbut the big move there coming through for Tesla after as you said, Paul, verymuch an earnings report that traders and investors wanted to see here.Yeah. Let's get a bit more on Tesla's earningsand bring in global business editor Peter Vecchio.And Peter, suffice to say all week we.

Were building up to what was expected tobe a pretty horrible quarter and a horrible quarter we got, but sharessurging after ours. Analysts really liking what they heard.Yeah, well, I think the earnings report was a mainly put in the rearview mirror.And what analysts were really looking for was the forward looking commentsfrom Musk and particularly around strategy and a more affordable car.And he said what they wanted to hear, which was that they're going toaccelerate the development of new models, including a more affordable car.On the earnings call, he didn't give an exact timeline, but he said early 2025,if not like this year, and that to bring.

A big bring forward and also reassuresanalysts and investors because there had been some speculation that the idea of amore affordable car was going to be shelved.Instead, it's a really important area for Tesla to get into something.Around 30% of car sales in the US are for cars priced below about $35,000,which is about where the model Y comes in.Now if the recent price cuts and tax credits and so that's a big chunk of themarket to be missing out on and they really need something to drive that nextstage of growth at the company. And perhaps the next stage of growth,Could that be autonomous driving?.

We know that Elon Musk was very bullishabout that. How significant is it to Tesla's future?Yeah. And about like really significant, likeMusk really laid out a picture of Tesla as an autonomous driving company at onestage saying on the investor call that if you didn't think that Tesla was goingto sell autonomous driving, then you shouldn't be an investor in the companyand sort of urged everyone who was thinking about Tesla to go out and drivea Tesla with its latest version of full self-driving 12.3,saying it's impossible to understand the company without doing this.And he sort of like laid out this vision.

Of Tesla with autonomous cars whereyou're able to summon a car via an app, it takes you to your destination, youget out and you don't even think about how the car got there.It just did. And he said, it's going to be like hesort of sees his vision or a future where Tesla is some kind of some kind oflike combination of Airbnb and Uber, where they own some of the cars that'sin this autonomous fleet. But also as a Tesla owner, you could putyour car into the fleet to be used as a as a robo taxi and then take it out whenyou want to. He said, you know, rather than have yourcar sitting in the driveway where most.

Cars spend most of their time, it willbe out on the roads being used. At one stage he was sort of likequestioned about this and it was his answer in a typical musk, why he waslike, well, tell us about this future horse drawn carriage you're making.And his answer is, well, it doesn't need a horse.That's the whole point. Andyeah, yeah, yeah, certainly some interesting commentary coming out.Quite colorful pattern as we said that that stock surge in after hours withanalysts liking what they heard in that earnings call even though earnings ofcourse a miss on a variety of metrics.

But that was our global business editorPeter Vercoe there. And I let's shift focus now to tensionsbetween Beijing and the West, because China has launched its harshest attackyet on US, complaints about industrial overcapacity ahead of the arrival ofSecretary of State Antony Blinken. The Foreign Ministry says Washington hasthe malicious intent of curbing and suppressing China's industrialdevelopment, with claims that amount to naked economic coercion and bullying.Blinken arrives on Wednesday for a scheduled three day visit.And let's get more on that outlook now for us on a U.S.relations Bring in Ian Bremmer.

He's president at Eurasia Group.And Ian, we've really rarely heard China holdingsuch briefings before, a top US official visit.And at the same time, rhetoric from from the US is being dialed up as well.And and more concrete actions like this possible ban on Tik Tok in the US.So is this just sort of setting us up for a further setback in relations inwhat's a very key election year as well? The trend for this year has been moreengagement, more communications, but not more trust.And so what that means is you still have plenty of areas that the countries areunhappy with each other, but that when.

There is conflict, the conflict does notescalate out of control. Rather, the escalations are targeted andcalibrated. So we can say that the relationship isgetting worse. It's true, but it's getting worse quiteslowly. And there's more stability to therelationship than there was, for example, when we saw the balloonfloating over the United States or when we saw Pelosi, the former speaker, makeher trip to Taiwan. So it's really whether you see it asglass half full or half empty. But there's a lot more intentionality tothis relationship today than there has.

Been over the past several years.Yeah. Balloon gate.Of course we know. Yes.There's been a lot more engagement and visits following that event.But I'm curious, because when you say more engagement, more communicationsometimes is the silent treatment. Is that definitely worse?When we had a lack of engagement. Yes, worse.I promise you, it's worse when you don't have military to military conversationsso that if something goes wrong, they're not talking to each other and they canmisinterpret it.

It's absolutely worse.You want one of the reasons why the US-China relationship over Taiwan ismore stable than, say, with the Philippines.The second Thomas Shoal, the South China Sea, is because for 50 years the US andChina know each other's red lines. They know what the challenges are in therelationship. They communicate constantly.So it's very easy to make extremely nuanced calibrations up and down in thetension of the relationship. It's why after we had an election acouple of months ago that didn't go the way China wanted in the Taiwaneseelections, the Chinese response wasn't a.

Strong and sudden escalation thatbrought the two sides to crises. Nor will it be next month whenformer Vice President Lee becomes President Lee of Taiwan and hisinauguration. It's always better to have moreengagement, more conversations, especially when you don't trust eachother. I mean, really what Biden has tried todo is make sure that if there are problems in the relationship, that Chinais not surprised. They don't find out from CNN or from Foxthat they find out directly from the interlocutors that they show a level ofrespect.

And the Chinese government hasappreciated that. I do think that we have more stabilityin the relationship today than we did before the Woodside summit in November,when she and Biden last met for several hours face to face.But in terms of silence being worse, we're probably going to get the oppositeof silence pretty soon as we head into election season coming up in November inthe US. One could expect the anti-China rhetoriccould get pretty hot when this kind of thing happens.Is there a risk of causing lasting damage to the relationship, or doesChina just tend to view politics as.

Politics?You know, there is, but there's not as much pressure on the Americans to dothat. I mean, frankly, the fact that therelationship has stabilized without Biden giving away the store, he hasn'tpulled back on tariffs, for example, that were put in under Trump.He hasn't pulled back on export controls on semiconductors.You've got a new investigation into Chinese shipbuilding which is beingopened right now. You mentioned tick tock as well.You've got $2 billion of military support that's heading over to Taiwan aspart of the $95 billion package now.

Working its way through Senate.I mean, it's not as if Biden's taking a lot of inbound criticism from theRepublicans on being too soft on China. It is one of the very few areas offoreign policy, not Russia, Ukraine, not the Middle East.Lord knows, not the border issue. Biden's getting criticized from theRepublicans on almost everything in foreign policy, but not on China.And that actually gives him a little bit more flexibility, more room to run inthis election period on that on that specific relationship.Yeah. In terms of the tech talk question, wedid hear from Donald Trump blaming.

President Biden for what could amount toa tick tock ban. But of course, Trump himself tried toforce the sale of tick tock when he was in power.So can you say with any certainty what a potential second Trump presidency wouldmean for the future of tick tock? Well, I think as long as Trump continuesto get a lot of money from people that want to talk not to be banned, that he'sgoing to stay in that camp. I mean, you're right.That's a 180 flip from Trump, but it's very consistent.He usually is willing to say whatever is required to go to the highest bidder interms of his his lobbyists and his.

Donors, especially when he has to spendso much money on legal fees in in in while he's contesting this campaign.So I think that's the most relevant, in fact, perhaps the only relevant datapoint that describes why Trump is in a different position right now.All right. Ian Bremmer from Eurasia Group is goingto be staying with us because still ahead, we're going to be taking a closerlook at tension in the Middle East, but also Tesla's results and its plan tospeed up the launch of more affordable models.Deep waters. The Gene Munster is going to share hisoutlook later in the hour.

Spring season is here.I think we're all asking the same question just how much earnings growthwe're expecting. Bloomberg is first to break the numbers.Iliad is coming out right now. We have talked to a number of shares ofpinterest lucid group coming out with its earnings.All eyes right now on nvidia. A lot still to come with the smartestinsights. How much bigger could profit and revenuehave been better than what the Street was expecting back in line withestimates? We will have full and instant analysis.Continuing coverage on Bloomberg Context.

Changes everything. Checking in on how the oil price istracking right now has been a kind of an interesting a few days for oil, in fact.We've got WTI prices just creeping up a little in early trading, but a lot ofwhipsawing going on with questions over tension in the Middle East.We saw that big spike, of course, on Friday, but oil right now still higherthan where it was five days ago. And that's despite things seeming tocalm down in the Mideast. Still with us now, we do have IanBremmer, founder and president of the Eurasia Group.And I just want to get your view on.

Where we are in terms of Middle Easttension at the moment. How confident are you that the risk ofan escalated conflict between Iran and Israel has receded for now?And we sort of back to that situation normal of just a simmering proxy war.Yes and no. Last week's crisis is over.Between Israel and Iran, we're not about to see another major tit for tat strikeby either side directly against the other.That was, of course, a concern of the markets a week ago.But this has not contained the broader war.The Americans at this point continue to.

Expect, despite their ultimatum to theIsraelis against this, that there will be a ground incursion in Rafah in thecoming weeks with over a million Palestinians sheltering there.That comes against the backdrop of a proxy war with Iran leading theso-called axis of resistance, terrorist organizations that do not respect theright of Israel to exist. And they are engaging in strikes in theRed Sea, engaging in strikes against American, British and other militarytargets in the region. This is still a very, very dangerousenvironment, and there's no broader ability to bring that war to an end.On the subject of the Rafah incursion.

How close do you gauge Israel to beingto its goal or its stated goal of eliminating Hamas?And is it realistic? And if it succeeds, what happens next?You'll remember that in the early days after the October seven terroristattacks, that President Biden said that Israel needed to learn the lesson of911, that the United States didn't just take out bin Laden, didn't just take outAl Qaida, but attempted much broader wars against terror.Has the United States succeeded 20 years later in winning a war against terror?No one would say that. How about the Taliban?Well, they're back in Afghanistan.

I think we're going to have a similarconversation about Hamas. Hamas itself may be destroyed as a as anorganization, but if they are, they will be replaced by other militantorganizations that have the same political ambitions.Not to mention the fact that Palestinians are much more radicalizedin both Gaza and the West Bank. On the back of the violence that we'veseen over the last six months. So I fear as much as I have greatsympathy for the Israeli people in wanting to ensure that they can defendthemselves and their children and that you don't have a government that is runby a terrorist organization that wants.

To wipe them out.I think that the way that they have gone about that war has ultimately made themless secure and will ultimately make their enemies stronger, both in Gaza andmore broadly. So then what are the odds of a ceasefiredeveloping And and would there be any sort oftimeline on that? Given that you do have a hard lineapproach on both sides? Well, there was an effort to get atemporary cease fire that many hoped could lead to a longer cease fire.If you had gotten many of these hostages that continued to be held by Hamascivilian hostages, many of them in Gaza,.

Left free.And, of course, that hasn't happened and it doesn't look close to happening.And absent that, I don't see a cease fire from Israel occurring.I also don't see a cease fire with this Israeli war cabinet.As long as you have thousands and thousands of Hamas fighters on theground in Gaza now that may be working at counter purposes to their long termstability. But this is not just a matter of theIsraeli prime minister. The entire war cabinet believes thatthey have a lot more to do militarily in Gaza before they can declare missionaccomplished, if you will.

Not only that, but there's also theHezbollah issue. The Israelis have evacuated almost100,000 Jews from the north of Israel because they believe that they are notadequately defended and secure from rocket attacks that come from Hezbollah.If the Israelis do not in some way engage militarily against Hezbollah toensure that that safety, well, how are they supposed to announce that thesepeople are going to come back so that they've gotten themselves in in a bit ofa bind? It's very hard to see how they declarevictory either in Gaza or with Hezbollah in the foreseeable future.Right now, it's really hard to see.

Do you think that because it's clearly aconflict that's not just a couple of parties, there's so many differentactors that are involved at this point. Do you think that the the the thatIsrael but also most notably the US, sort of underestimated the amount ofcooperation and collaboration you would see between Iran, between China, betweenRussia, between North Korea in this conflict and also what's happening inUkraine, that you just have these separate axes that are operating.I don't think that there is a significant amount of help or supportthat is going to Iran in this war. Certainly, Russia and North Korea arevery simpatico with Iran and there's a.

Lot of trade going on this technologythat is being transferred. But I wouldn't say that Iran has had anygreater success in this war on the back of those relations.I take exception to including China in that grouping, as you have.I know that some have done that. But when I look at Russia, Iran andNorth Korea, I see three states that are considered rogues.They're pariahs for the United States and its allies.No meaningful diplomatic or economic relations with those countries.And all three of those countries are led by people who believe that chaos in theinternational order is to their.

Advantage.China does not believe that. China recognizes they need the level ofstability in the global order, including in the United States, to be successfuland more powerful over time. Now, China is a friend of Russia.China certainly gets a lot of energy from Iran.They trade a lot with these countries, but they are not rooting for these warsto get worse. In fact, China would much rather see acease fire in Ukraine. China would much rather see a cease firebetween Israel and Hamas, where the Russians don't want that at all.The Russians want to see it all burn.

And that is a much more dangerousposition, especially for a country that is systemically important in theirenergy and other resource exports as well as, of course, with their offensivecyber capabilities, military capabilities, espionage capabilities andtheir nuclear capabilities. Ian Bremmer, the President, EurasiaGroup, thanks so much for your insights this evening.And we have plenty more to come on DAYBREAK, Australia.This is Bloomberg. Well, let's just take a quick look athow a tracking in the currency space at the moment, the Bloomberg dollar spotindex backing off just a little.

The Aussie dollar now knocking on thedoor of $0.65. A couple of currencies us to watch inAsia, though the yen. We've got the BOJ pledging to focus onweakening the currency at its upcoming policy meeting that begins tomorrow.And China, meanwhile, saying the regulator's going to defend the bottomline of financial security. More in a moment on DAYBREAK, Australia.This is Bloomberg. All right.Let's take a look at how Tesla shares are tracking after hours.In a word, Wow. Better by 12%.That is going to make for a very.

Interesting open for the stock in the UStomorrow. Obviously, we'll be keeping an eye onTesla suppliers as well today and what an earnings call that was.We were expecting a pretty wretched quarter out of Tesla and it was indeedthat. But it was all about the outlook andplenty of headlines coming out of that call as well.Let's get some more analysis on Tesla's outlook now with Gene Munster.He's co founder and managing partner at Deepwater Asset Management.Gene, I want to start off by talking about potential new models out of Tesla,because that was the headline that a lot.

Of the media came away withearly next year, maybe late this year. We could see new models, but detailvery, very vague. Let me see.Executives really danced around the multiple questions on that on theanalyst call. And eventually Elon Musk himself justshut shut it all down. So what are you expecting in terms ofcheaper, newer models? So I guess to start out some context,the timing pieces important, I want to highlight that they have talked last sixmonths been between some growth curves there in this EV winter right now.And they've talked about the importance.

Of this next generation platform.This is three months ago. And so the talk of them on the calltoday, just moving that timeframe up by nine months is reaffirming to thoseTesla investors that in fact we're going to re accelerate growth earlier thanwhat had been expected, call it three quarters early.So that's one piece of it. The second is this unanswered componentto it, which is what is actually going on with their like, what are these carsgoing to look like? And as you said, they shut it down.But there was just this sliver of information that Elon gave.He said that when he was talking about.

The robotaxi in, the question came up onthe call, is this related to the robotaxi?And he said, I'm not going to answer questions.I've said what I'm going to say and wait until August 8th to hear more.And so based on that, you can read between the lines.They're probably going to talk about the Robotaxi as this next gen car and August8th. It's hard to believe that they thinkthat they can get that car out and approved within a year.But this is Tesla and they make big, bold predictions.Yet to give a bit of context around.

That.It took four years for the Cybertruck to go from announcement to actual delivery,but Tesla says it's not going to need a new factory to do this.Does that give you any clues? It does.I mean, I think that they can build this car, they can get this car to marketfrom in the next year. I think that that's very possible.That's different than in 2019 when he talked about a million robotaxis on theroad at the end of the year. They had basically very limitedproduction at that time. And so I think that the that dynamic isdifferent.

The piece that doesn't quite sit wellwith me, it's just there's the side of building the technology and there's theside of getting approval. They did mention that a few states havemade that approval and they expect more to come.But to me, that's probably the biggest bottleneck.So I think that the manufacturer knows that their existing facility doesincrease the probability. And let me kind of cut to the chase.And my bottom line here is they're not going to get a car, they're not going toget a robotaxi out in a year, but they probably do in two years.And if they do that in two years, I.

Think the shares go higher.How much demand, though, do you think there would be for an autonomousself-driving car? Well, I think there'll be a lot ofdemand. I think that not only will they bedemand, I suspect that for for safety reasons that other carmakers are goingto be required to have autonomy. And to put it into perspective, justsome quick numbers, at least related to the US, is that 42,000 people lost theirlives in 2023 from auto accidents. That's up from 37,000 in 2013.So over the past decade that has surprisingly increased.Of course, the reason is people are.

Distracted.So I think that the the opportunity around just making cars safer is a onebig piece to this. The second is what's the market forpeople essentially moving around for much cheaper?Imagine using Lyft or Uber at a 50% reduction in their current price.And I think that that's very appealing. And Ilan talked on the call about 7 to10 million vehicles being autonomous. And I think you can kind of throw thoseout the window. Who knows what the number is.But if they solve for autonomy, this will be a true breakthrough, a kind of aonce in a hundred years breakthrough in.

Terms of how people move.What do you think about the pricing of that as well?Because it seems like it'd be a more expensive vehicle, but at the same timewe've seen a really slack EV market and Tesla pushing through price cuts to tryand regain market share or gain further market share.So two topics when it comes to pricing. One is just the current pricingenvironment. And surprisingly, ASP is despite whatwe've seen in those headline price cuts. Average selling prices in the Marchquarter was flat. It was actually up 1% from the Decemberquarter.

And the Cybertruck kind of played inthat higher trim model Y, But so ASPs have been surprisingly stable given theoverall environment when it comes to the price of FSD.They've recently lowered that. And so they're, you know, making thisavailable if you buy it upfront for a third less going from around 12,000 and$9,000 if you buy it upfront. And so that is there are definitely somemoving parts around autonomy and how people are buying it, whether it'supfront or through subscription. The simple takeaway is this is that whenyou put all this together and think about a robotaxi that has autonomy, theaverage price of that vehicle.

Autonomously will be much less call it20 or 30% less than the average price of a new car today, which at least in theUS is kind of around $45,000. So I think pricing of these vehicles isgoing down and I think that profitability can actually increase atthe same time given the potential around charging more for FSD long term.Jane, one of the other things that Tesla talked about on this call was this ideaof unboxed manufacturing and how that would revolutionize sitcom production.What does that mean to you? What does it.So if you think about the concept of how cars have been made, it's traditionallya manufacturing line.

And essentially what unbox means is thatyou are building these cars in these modules in the manufacturing facility.And so people kind of come to the car and add different parts to it.So it's just a it's a different way. It's like flipping the wholemanufacturing process. I'm sure Henry Ford is not feeling goodabout this concept, but it has the potential to meaningfully reduce thecost of building a car. And I think that Elon has talked overthe years about being one of the competitive advantages of Tesla isbuilding the machine that makes the machine focusing on the factory piece.You don't hear about other carmakers.

Talking about this, but that is what isrelevant to this whole unboxed approach. It's just a new paradigm in terms ofmanufacturing that can dramatically lower the costs.Very similar to what the assembly line did 130 years ago.We've got a chart here that shows short interest in Tesla stock.Been here before, haven't we? That's now at its highest in two and ahalf years. And then today we saw the stock going upmore than 12% after hours. Do you feel like the scene is set herefor a another big battle between the shorts and the true believers of Tesla?And what's your price outlook?.

It's going to be an exciting two years,I would say if you're an investor or if you're just a bystander watching thiscompany progress, because one or two things is going to happen.This company is going to flourish or this company is just going to be yetanother automaker. And it is a very similar setup to whatwas going on in 2016, 2017 when they were trying to break through with Modelthree production. So this is not a bet the company onAutonomy and the ROBOTAXI, but I would describe this as them being all in onthat. And so to put it in the most basic levelis that this comes down to, for.

Investors almost a religious question.Do you believe that the future is autonomous, if you think thatelectrification and autonomy is the future?Tesla by far is in the best position to capitalize on that.If you think that that future is further off ten years, 20 years off, then thestock's not going to do anything and it is going to be really difficult to getthose investors who are in those different camps to really think straightabout what the other side is. So this is going to be a polarizingcompany, undoubtedly a polarizing stock for the next few years.Jane.

And as we speak, of course, Tesla issurging more than 12% in after hours. But that was Gene Munster, co-founderand managing partner at Deep Water Asset Management.And shifting to Apple now because independent research firm CounterpointResearch reports that the company's iPhone sales in China fell 19% duringthe March quarter. That drop is the Gadget's worstperformance in the country since 2020. For more, Bloomberg Tech reporter MarkGurman joins us. And Mark, there's a weak consumer, ofcourse, in China, but there's also shifting consumer preferences.And it's that latter part that seems a.

Lot more difficult to change now.I think you're right. I think it does come down to consumerpreferences in China because the smartphone market in China is not downoverall. You're seeing pretty substantial growthfor brands like honor. You're seeing a lack of growth, but alsono declines for some of the other brands there.So this is really about the iPhone and consumers in China picking otherproducts instead of the iPhone in numbers that they haven't since thebeginning of the COVID pandemic. So certainly Apple has some issues inChina.

They need to remarket the device,reposition the device, make upgrades that are tailored to the Chinese market.They don't do much to really tailor their products to China.Sure, they have everything geographically optimized, but there's nospecific features or enhancements there for that country.It's basically a translated version of the iPhone sold in every other country.But China, as you know, really needs some special hardware and software tomake it more unique to that market. Perhaps they do in the future betterintegration with things like WeChat or some of the other applications and superapps in China that really sell devices.

There.More optimization for local services. The other thing they can do is a lowcost iPhone. At some point I doubt it will happen,but they do have levers to pull. It's just about whether or not they'rewilling to do it. And Mike connected to that.How's Apple's progress on AI deployment? Yeah, so I that's the the talk aboutabout Apple right now here's the thing they're going to announce a slew of newfeatures June ten that they're worldwide developers conference.The big question I have is not necessarily how good are they going tobe, but are users really going to use.

Them?Are mass consumers really going to care? Or is this about simply appeasing thestock price? Right.If Apple's willing to chase the market. Right.Chase what Wall Street wants by adding a slew of AI features to its device inrapid fashion, why aren't they willing to do the same thing with a lower costiPhone and meet customers and meet Wall Street with what they want for somethingas important as the iPhone? Right.So certainly it's going to be exciting to see what features they add.I'm not really sure consumers are going.

To care in large numbers.That was i Bloomberg Technology. Reporter Mark Gurman there.And we'll have more ahead on daybreak australia.This is bloomberg. If we're going to recession, consumersin good shape. But that doesn't mean you can fight offthe effects of stagflation, something like that, if it gets much worse.And so I worry that it looks more like this that these than we've seen before.If you go back to the seventies, deficits were half with they are today.The debt to GDP was 35%, not 100%. And so part of the reason I think we'vehad this strong growth is the fiscal.

Spending.That was Jp morgan CEO Jamie Dimon on the strength of US consumers.And let's get a check now of morning calls ahead of the Trade Asia tradingday and amid discussions around the U.S. economy, corporate earnings.Morgan Stanley's Mike Wilson says he's avoiding any kind of big market calls onthe S&P 500. Instead, he's focused on findingopportunities beneath the surface. I think you just got to keep it reallyflexible. Hope in mind.That's what we try to do now with the with the stock picking.We haven't really talked much about the.

Index in the last four or five monthsbecause we're trying to focus on the relative value trades and we've got alot of those. Right.And hopefully, knock on wood, we can continue to do that.And turning to the yen. Japan's former top currency officialsays we're on the brink of a currency intervention.If the yen weakens further. Former vice finance minister Mizuhorefers our noted the yen's rapid depreciation against the dollar, despitethere being no change in US and Japanese interest rates.He says intervention will come if that.

Trend continues.Well, the weak Japanese yen might have helped the country's shares climb torecord. Trade is now, though, say it's gone abit too far. Our senior Asia stock reporter HiroyukiSano joins us now. How do you think why have they changedtheir mind now? Hi, Paul.That's a very interesting point. AndI guess the short answer is that the pain of weakening is becoming morepalpable in every corner of the economy. You know, the stock market has like 2billion, mainly because that is going to.

Benefit the export exporters andcompanies like Toyota and Honda. They are big players in Japanese stockmarket. So on the whole, the yen weakening wasthought to be beneficial to Japanese stocks.But the truth is where the light is brightest, the shadows are on thedarkest and you can find the shadow in the country's consumer sectors.I mean, if you look at the a consumer consumption index provided by the Bankof Japan, actually it hit the lowest level in two years, this in the lastquarter, excluding boost from inbound tourists.So consumption has been really sluggish.

In Japan, butinvestors have basically shrugged this off, mainly because we had such a hugewage hike that these things should be improving later this year.But the problem is a weakening is calling that scenario into question.So if the yen continues to weaken, thenobviously, you know, the scenario that that there will be a positive cycle ofrising inflation. The wages could be questioned because wemay not have a real. So the wage growth in the end so thatcompletely change the assumption. So that is why investors are now reallyconcerned about the weakness.

Yeah, that's been really the bigquestion here, too, Yuki. Would a weekend hurt consumption?And it's interesting because as you said, following the wage negotiationsand the positive outcome from that, we did see a big lift for consumptionrelated shares. But what's been happening in that periodsince that period? Yeah.So I mean, if you look at the stock market, the domestic sectors have beenvery sluggish. And I think the best example is thethe London, the transport index, which is basically railway companies ortransport companies.

So they have benefited hugely from therecord high inbound tourism. But despite that, their their shareshave been basically flat since the start of this year compared toa gain of something like 30% in the broader market.So that is a very good example. Another one probably is retailers.Now, they are not pure domestic play these days because many companiesstarted to expand their business overseas so that their bottom line willbe affected by a lot of, you know, factors outside Japan.But still they also significant, significantly underperformed the overallmarket.

So clearly, investors are alreadyworried about the state of the domestic economy.That was our senior Asia stock reporter Hiroyuki Sanada there.And be sure to tune in to Bloomberg Radio to hear more from the day's bignewsmakers and get in-depth analysis from the debate team broadcasting livefrom our studio in Hong Kong. You can listen via the app radio plus orBloomberg Radio dot com. Plenty more ahead.Stay with us. Just a quick note of data coming out.March services producer prices rising 2.3% on the year.The estimate had been for a reading of.

2.1%.So that is more than economists had been expecting, of course, And it's actuallyan uptick as well from the reading price that's just been revised to 2.2% from2.1%. So, Paul, it's just continues to be thatstory of more inflationary signals that are coming in Japan.The question of the week yen and how much that's playing into it, butsomething to track quite closely, even though the BOJ, of course, still expectsinflation to trend lower into year end and no change is expected at theirmeeting later this week. You will keep an eye also on shares ofEurope's biggest software company,.

A.S.A.P.They are rising the most since January after it forecast record revenueexpansion from its cloud services. CFO Dominic Isom told us it sold down tothe boom in artificial intelligence. The advent of A.I.has clearly propelled the story of the transformation to the cloud to move ourcustomers from their on prem installations onto the cloud, resultingin an uptick on a constant currency basis by 25% in our cloud revenues.Our more forward looking so-called CCB, which is basically the 12 month aheadsubscription revenues we have already contractually locked in, is even growingat 28%.

That's a record growth.And all of that is driven really by the core offering we have in the cloud,which is called the Cloud IP suite. That offering has actually generated inexcess of 30% growth for nine quarters in a row now.What is the demand, Dominic, in terms of the specific applications of artificialintelligence in the cloud that you see most commonly invested in by thecompanies, who are your clients? Well, it's a broad set of applicationsthroughout the enterprise. Some on H are on finance, on the supplychain, so there's actually no exclusion. I would say it's really, really broad.We have brought about 30 use cases.

Recently to the market.We are planning another 100 to come. We already have more than 27 27,000customers using AI powered use cases in the corporation.The 300 million users we have by now in the cloud are really benefiting to makethemselves more productive and to fight, for instance, rising inflation insalaries. How much are you winning market shareversus simply just capitalizing on the incredible demand that we see right nowfor artificial intelligence? Well, undoubtedly, on the cloud P suite,we do win market share. I mentioned the 30% plus growth we have.The market is more in the low to mid.

Teens.So that's a very tremendous outperformance.It's like more than twice the performance of the market.So from who? Who are you gaining market share from inparticular? Well, sometimes it's kind of homemadesolutions we are displacing. Sometimes it's also against our keycompetitors. It's also the fact that SAP has beenmore focused on the on prem installations that is software deployedby the customers. Now, we are really moving to the cloudso we can convert that huge customer.

Base on prem into the cloud, and thatdrives the growth. That was the SAP CFO, Dominique Kassam,speaking with Bloomberg's Lisa Abramovitch.And these are the stocks are going to be watching when trade opens in Korea,Japan and Australia in just a few minutes.Tesla's Asian peers and suppliers, of course, still a focus for us.The Abe maker we know is trying to move investors attention away from a toughfirst quarter and onto its plans for cheaper cars and a fleet of RobotaxiTesla to note up more than 12% in after hours.And you can also watch Asian chip makers.

That's after us has rallied overnightand Texas Instruments another name that's been surging in after hours,keeping a strong revenue forecast. Plus, keep an eye on apple supplies.After counterpoint, research said iPhone sales in China fell almost 20% duringthe March quarter. Let's take a quick look at how we'retracking in the commodities space. And on the subject of China.Chinese producers really balking at the high prices for copper at the moment.We did see a big rally for copper towards the end of the session inLondon. But Chile, also the world's biggestcopper producer, is trimming its.

Estimates for production.So we might see a few pressures on the copper price there.Iron ore, meanwhile, that seems to be finding a floor.It's actually ticking up a little bit, 114 40 per tonne.Gold market opens in Sydney, Seoul and Tokyo.Up next, this is Bloomberg.

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